The Panic Is On!

Keith Johnson
Revolt of the Plebs
May 13, 2010

What this country is coming to
I sure would like to know
If they don’t do something bye and bye
The rich will live and the poor will die
Doggone, I mean the panic is on!

–Song from the Great Depression

As the Great Depression of the 1930’s was getting underway, President Herbert Hoover refused to acknowledge it. In the weeks following the events of Black Tuesday, Hoover called the economy “fundamentally sound.” Months later, he still insisted that the strength of the American economy was “unimpaired.” However, by 1931 he could no longer hide the truth. With the economy in shambles, Hoover was forced to declare that America was indeed in a ‘depression’. He chose the word ‘depression’ because he believed it to somewhat innocuous and far less provocative than terms like ‘panics’ or ‘crises’ that had previously been used to refer to significant economic downturns.

That same semantic game is being played on us today. What we now call a ‘recession’ is what was known as a ‘depression’ back in the 1930’s. As economist John Williams explains:

“The Great Depression was one that was so severe that in the post-World War II era, those looking at economic cycles tried to come up with a euphemism for “depression.” They didn’t want to create the image of or remind people of the 1930s. Basically, they called economic downturns recessions, and most people think of a depression now as a severe recession.”(1)

The lies propagated by our government and their paid shills are perhaps their greatest crime. Deceiving the people concerning the scope and magnitude of our financial crisis denies them the opportunity to prepare for the tough days ahead. Even the word depression does not fully impress upon the people the serious predicament we now face. Perhaps its time we do remind people of the 1930’s and draw parallels between those tragic times and our current situation.

Today’s unemployment rate is fast approaching the worst levels seen since the Great Depression. The official unemployment rate (U3) released by the Bureau of Labor Statistics is currently at 9.9%. This is the number often reported by the mainstream media for public consumption but is far removed from reality.

To get closer to the real number we must consult the (U6) figure that is often touted as ‘true unemployment’. This figure adds into the equation those who fall under the contemporary definition of ‘discouraged worker’ and those who can only find ‘part-time’ work. That number puts the ‘true unemployment’ rate at 17.2%. But wait, there’s more!

Today’s definition of a discouraged worker is one who has not found work within the last year. Prior to 1994, a discouraged worker was defined as one who had not found work within the last month. That’s a big discrepancy. If we add those lost souls back into the equation, we come up with a more realistic unemployment rate of right around 22%. That’s just three clicks shy of the 25% often cited for the worst levels of the Great Depression in 1933. That 25% unemployment figure was reflective of all workers both on and off the farm.

Many economists, intent on disproving any comparison of today’s unemployment with that of the ‘Great Depression’, will often site the non-farm unemployment figure of 34%. But it should be pointed out that during that time, 27% of America’s employed worked on the farm. Today that number is only 2%.

Unlike today, The Great Depression of the 1930’s was deflationary. The Consumer Price Index was at 17.3% when it began in 1929. By 1933 it was down to 12.6%. In other words, as the depression progressed, the cost of things dropped; what cost $1.00 in 1929 only cost 73 Cents in 1933.(2)

Not so with the depression of today. Ours is an inflationary depression that is fast becoming hyperinflationary. Hyperinflation comes when the increase in the money supply causes prices to rise so rapidly that the highest denominated bank note becomes less valuable than toilet paper. This is being facilitated by industry bailouts, unnecessary wars, foreign aid to Israel and entitlement programs that were not factors in 1933.

Since 1933, inflation has increased 1,627.23%. To calculate its decimal equivalent you need to move the decimal point two places to the left. So 1,627.23%=16.2723 in decimals. This means that what cost $1.00 in 1933 costs approximately $16.27 today.(3)

The average American’s annual income in 1933 was $1,550.00. Today, that would be the equivalent of $25,218.00. According to the last Bureau of Labor Statistics report for 2009(4), the average American’s annual income was $28,592.00 (mid range between highest and lowest by State for 1 person). This may seem like we’re ahead of the game compared to the Great Depression. However, when you consider that the lowest bracket of income tax was levied at 4% in 1933 compared to 15% in 2010, you can see that we are almost on par. But you also must consider the plethora of other taxes and deductions that have since been siphoned out of the average American’s paycheck. Contemporary sales taxes and compulsory enrollments like mandatory insurance (both auto and health) must also be added into the equation to get a better gauge as to where we are now compared to days gone by.(5)

Prices of things, on average, were much more affordable back during the Great Depression than they are now. Here are some basic items for comparison:

Cost of a new house 1933: $5,750.00 (equivalent to $93,565.72 in 2010)

Cost to rent a house in 1933: $18.00 per month (equivalent to $292.00 in 2010)

Brand New Plymouth in 1933: $445.00 (equivalent to $7241.17 in 2010)

Gallon of gas in 1933: 10 Cents (equivalent to $1.62 in 2010)

Loaf of Bread in 1933: 7 Cents (equivalent of $1.13 in 2010)

1 Lb. Of Hamburger Meat in 1933: 11 Cents (equivalent to $1.79 in 2010)

Can of Campbell’s Vegetable Soup in 1933: 10 Cents (equivalent to $1.62 in 2010)

Dozen Eggs in 1933: 5 Cents (equivalent to 81 Cents today)

Take the equivalent monetary values listed above for 2010 and do your own research. Can you buy the same items today for that little cash? According to the 2009 census, the cost to rent a house is approximately $775.00 per month, on average. The cost of even the cheapest automobile is in the tens of thousands and I don’t need to tell you about everyday household goods. Consider these the good times. When hyperinflation sets in, these prices will soar. We don’t live today like they did back in the 1930’s when people were, at most, one generation removed from the farm. As was pointed out previously, 27% of American workers made their livings on the farm and were able to provide many of their own basic needs from that culture. Today, that number is only 2%.

Despite this data, deniers will refuse to believe that they are living through a depression. Some need tangible, salient evidence. They need to feel the depression, or at least have a cognitive reference point that coincides with the black and white images they have come to associate with a depression. Where are the soup lines? Where are the shantytowns? Where are the armies of disheveled hobos playing harmonica as they roast a can of beans over a roadside campfire?

The complexion of today’s depression is certainly different from the hard luck images of the 1930’s. But these are just cosmetic differences. When you strip away the veneer, you find that we are afflicted with the same problems as they were back then. Today’s soup lines come in the form of food stamps. Public housing and tent cities are today’s shantytowns. Hobos are now called ‘the homeless’, and many of them are disappearing from the streets and ending up in a burgeoning penal system that swallows them up on petty drug charges.

There are other factors that keep this depression suppressed in the minds of the American public. The most significant of these is unemployment benefits. This did not exist during the Great Depression. When you were out of work, you were out of money. This hit people immediately and many had no way to obtain even the most basic subsistence to feed their families. The welfare system is another contemporary mechanism that was not in place during that time. Right now, these are perhaps the only two things that distance the human suffering from our true economic reality. But they weren’t built to last, and the only reason they have lasted this long is because the government has a vested interest in keeping these entitlement programs going. Providing basic subsistence keeps the people dependent and apathetic to their plight. As long as people have a roof over their head and enough to eat they will allow those who provide those things to take everything else they have.

The Federal infusions of funds into the unemployment and welfare systems will continue only for as long as it takes the bankers to fully rob the American people of everything they own. In the meantime, unemployment will continue to rise and the depression will deepen to levels unimaginable as the unsuspecting unemployment recipient spends his jobless days as if he were on a paid vacation. He’ll waste his checks on beer and porn and stretch out on the couch until the final week. Then he’ll get serious, only to find that things are not as rosy as the liars on CNBC promised they’d be.

Unlike 1933, our depression comes at a time when there is increased foreign war spending and many of our potentially unemployed youths are serving overseas. Imagine what would happen to the unemployment rate if these wars came to an end. Then imagine what would happen if unemployment benefits and welfare entitlement programs ceased to exist. When you do, you can understand why all of these things continue to be funded.

This is a robbery, and the hostages are being held in the back of the store learning to love their captors. Most Americans are under a spell best described as the ‘Stockholm Syndrome’. In psychology, Stockholm syndrome is a term used to describe a paradoxical psychological phenomenon wherein hostages express adulation and have positive feelings towards their captors that appear irrational in light of the danger or risk endured by the victims. The syndrome is named after the Normrmalmstorg robbery of Kreditbanken at Norrmalmstorg in Stockholm, in which the bank robbers held bank employees hostage from August 23 to August 28, 1973. In this case, the victims became emotionally attached to their captors, and even defended them after they were freed from their six-day ordeal.(6)

Until the American people snap out of their trance, they will refuse to believe that they are in a depression, recession, panic or crisis. To them, it will be a loving embrace by a charismatic savior. Only until they feel the peircing bite of cold air on their necks and the pains of an empty stomach will they finally come around to the realization that the panic is not coming—but that the panic is on!

(1) http://www.theaureport.com/pub/na/6199

(2) http://www.gold-eagle.com/editorials_08/amerman021209.html

(3) http://inflationdata.com/Inflation/Inflation_Calculators/Inflation_Rate_Calculator.asp#calcresults

(4) http://www.acf.hhs.gov/programs/ocs/liheap/guidance/SMI75FY09.pdf

(5) http://www.thepeoplehistory.com/1933.html

(6) http://en.wikipedia.org/wiki/Stockholm_syndrome